Chinese Central Bank Raises Stake in HDFC

CIOReviewIndia Team | Monday, 13 April 2020, 11:45 IST

Chinese Central Bank Raises Stake in HDFC

The Chinese central bank People’s Bank of China has raised its stake in HDFC Limited from 0.8 percent to 1.01 percent, purchasing 1.75 crore shares. The share purchase has happened likely between the months of January and March, when the shares of HDFC have fallen significantly. The shares of the bank have witnessed a massive fall by 41 percent since February this year. Currently, the value of the holdings of People’s Bank of China in HDFC is aroundINR 3,000 crore.As of now over, 70 percent of shareholdersof HDFC areforeign investors.

Though the investment is not usual, it is not a sudden development and PBOC is not a new investor. “The disclosure has been made now since the stake has hit 1 percent regulatory threshold. PBOC has been accumulating the shares over a year, and are now holding 1.1 percent,” Keki Mistry, VC and CEO of HDFC.

The purchase has surprises many from the industry, particularly given the timing of purchase when the world is in a crisis due to coronavirus. “It is common for central banks to buy shares on behalf of the sovereign wealth funds of their respective countries.HDFC stock is also owned by SAMA, the Saudi Arabian Monetary Authority (the country's central bank), purchased on behalf of their sovereign wealth fund. Many other sovereign wealth funds such as such as the government of Singapore also own HDFC and other Indian stocks. There is nothing unusual or conspiratorial in these holdings; besides they are too small to matter — each about 1 percent or less,” said Deepak Parekh, Chairman of HDFC.     

HDFC has seen great interest from various investors in the industry. For instance, the Life Insurance Corporation of India increased its shares in HDFC Ltd from 4.21 percent to 4.67 percent in December last year.


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